The NSW budget’s bottom line is forecast to be nearly $900 million higher than previously thought, the government has revealed.

The budget result for 2015-16 is forecast to be a surplus of $3.4 billion – $875.7 million higher than predicted, the government’s half-yearly review, released on Thursday, revealed.

Surpluses had been bolstered by $438 million transfer duty revenue after the higher than expected sale of the state’s electricity poles and wires network TransGrid last month.

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“NSW is nearly debt free for the first time in two decades, with the state’s net debt position shrinking to $1.8 billion,” Treasurer Gladys Berejiklian said.

But that won’t last for long as the government starts spending on infrastructure promised at the March election.

A cooling property market and declines in mining royalties will also curb the government’s revenue.

“Residential stamp duty forecast for 2015-16 is the lowest for four years,” Ms Berejiklian said in Sydney on Thursday.

“The Federal Government’s cuts to health and education will also put pressure on the state’s coffers.

“Budget cuts have hit us dramatically but we have assumed this in our forecasts … [but] this is still a very healthy period moving forward”.